Allocation of Joint and Several Liability on Consolidated Obligations Among the Federal Home Loan Banks

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The Federal Housing Finance Board (Finance Board) is amending its rule governing the issuance of consolidated obligations, i.e., bonds, notes or debentures (COs) by the Finance Board pursuant to section 11 of the Federal Home Loan Bank Act (Act), 12 U.S.C. 1431, to establish a framework for the orderly allocation of joint and several liability for the COs among the Federal Home Loan Banks (Banks). The final rule adds new provisions to the Finance Board's regulations and is intended to protect holders of COs to the greatest extent practicable by providing a framework to ensure the continued timely payment of all principal and interest on COs in the unlikely event of the projected or actual inability of a Bank to meet its debt service payment obligations.